§ 19-2-14 - Conversion to stock form of financial institution.
SECTION 19-2-14
§ 19-2-14 Conversion to stock form offinancial institution. – (a) Any mutual savings bank chartered under the laws of this state may convertto and become a financial institution with capital stock upon adoption of aplan of conversion by two-thirds (2/3) vote of the board of trustees andapproval of the plan by the director or the director's designee and a majorityvote of the depositors of the savings bank present in person or by proxy at ameeting called by the board of trustees. For the purpose of this section,unless otherwise required under applicable provisions of federal banking law,the depositor shall be deemed to be the individual whose tax identificationnumber or social security number is used by the bank for interest reportingpurposes to the internal revenue service. The plan of conversion shall providethat the savings bank shall issue and sell the stock issued in connection withthe conversion at a price that represents its pro forma market value, asdetermined by an independent appraisal, and shall offer its stock initially ina subscription offering to the depositors of the savings bank on an eligibilityrecord date established by the board of trustees, giving those depositorspriority rights to purchase the shares over the general public pro rata basedon deposits. The converted savings bank shall also create a liquidation accountfor the benefit of its depositors on the eligibility record date, in an amountrepresenting the undivided profits and guaranty fund of the savings bank atthat time, balances of which shall be calculated and subsequently recalculatedas determined in accordance with regulations promulgated by the director or thedirector's designee. Unless otherwise impaired, any liquidation account socreated also shall be considered as part of the paid-in and unimpaired capitalstock and surplus of any stock financial institution. The plan of conversionmay provide for restrictions on the amount of stock which any person or entitymay purchase in the conversion, or own or control thereafter, which may also beincorporated into the stock agreement to form the converted entity.
(b) In connection with the conversion, the financialinstitution may form a holding company or utilize an existing holding companyto hold all the shares of the financial institution, and offer to itsdepositors and general public (subject to subscription rights in favor ofdepositors) all of the stock of the holding company in lieu of the capitalstock of the financial institution. This conversion may also be accomplishedpursuant to a merger as permitted by this title. The converting savings bankmay at the time of conversion merge any financial institution subsidiary intothe capital stock financial institution resulting from the conversion, or causethe subsidiary to become a separate subsidiary of a holding company.
(c) No savings bank may convert to a stock form of financialinstitution unless its deposits will continue to be federally insured. Thecorporate existence of a mutual savings bank converting to the stock financialinstitution shall not terminate, but the financial institution shall be deemedto be a continuation of entity of the savings bank so converted.
(d) In connection with its approval of the plan ofconversion, the director or the director's designee shall approve the proposedstock agreement to form the converted entity. The director or the director'sdesignee, upon finding that the requirements of this section and applicableregulations have been met, and that the conversion has been completed with thesale of all shares offered in the conversion, shall issue a certificate ofapproval of the conversion to the converted entity. Upon the payment of fiftydollars ($50.00), the certificate of approval shall be filed in the office ofthe secretary of state, together with the certificate of the general treasurerthat the converted entity has paid into the treasury for the use of the state asum equal to one tenth of one percent (.1%) of its capital stock which in noevent shall be less than one hundred dollars ($100). Upon the filing of thecertificate with the secretary of state and payment of fifty dollars ($50.00),the secretary of state shall immediately record the certificate of approval andstock agreement to form, whereupon the stock agreement to form will becomeeffective.
(e) The director or the director's designee shall issue rulesand regulations implementing this section.
(f) To the extent not inconsistent with this section, eachmutual savings bank converted into a stock financial institution shall have allthe powers and privileges conferred on, and be subject to all the duties andliabilities imposed on, financial institutions.